If the 2013 proposal passes, an even higher rate would likely be sought in the near future unless elected officials practice some fiscal discipline

Wyoming Should Cut, Reprioritize Spending to Avoid Fuel Tax Hike

A Commentary by Maureen Bader, Wyoming Liberty Group and Lee Schalk, National Taxpayers Union

Fuel tax hike proponents in Wyoming have not-so-cleverly disguised a tax hike bill as a highway funding bill. While a number of Wyoming’s roads may need repair, will the proposed 71 percent spike in the state gas tax rate patch all of the cracks and potholes today and in the future? Not likely, as long as the state continues to increase spending on non-essential programs instead of focusing on the roads and highways that keep Wyoming’s economy strong.

Wyoming already has enough money for roads. Over the past decade, Wyoming legislators have doubled general fund spending from $1.5 million to $3.2 million and total spending from $4 billion to $8 billion. Already overburdened taxpayers should not be forced to contribute an additional dime-per-gallon of gasoline to fuel the state’s inability to prioritize spending.

Prioritized spending that avoids unnecessary government programs and requests is critical for the long-term fiscal health of Wyoming. But instead of developing a viable long-term funding plan for highway fixes during the spending run up, policymakers have depended on “one-time” appropriations for road repairs, ranging from $40 million to $190 million. This indicates a systemic problem that yet more money will not repair.

For WYDOT, prioritized spending means that fuel tax dollars should be spent exclusively on highways, but a close look at the 2013-14 WYDOT budget reveals that millions in tax revenue will be set aside for other undertakings. For example, $2 million will be spent on the Recreational Trails Program, and a University Technology Transfer will receive about $62,000 per year. WYDOT should be commended for cutting expenditures on equipment, buildings, travel, and training in its current budget, but Wyomingites should know that the extra dollars they’ll be forced to spend on fuel are not automatically pumped into roads.

Additionally, lawmakers must recognize that Wyoming’s transportation system is in better shape than all but one of its six neighboring states, a feat accomplished in spite of a gas tax rate currently ranked second lowest in the nation. According to the American Society of Civil Engineers, among Wyoming’s six neighboring states, only Montana received a better road condition rating, despite all of them imposing a significantly higher gas tax rate. Clearly, there is no evidence to suggest higher taxes guarantees better highways.

While highway spending and budgets vary from state-to-state, the takeaway is that Wyoming should not be so eager to match the fuel tax levels of its neighbors. The low tax rate gives Wyoming a distinct advantage for businesses, workers, citizens, and even tourists. A 10-cent boost would cause its tax advantage to disappear, and Wyoming’s ranking would erode from second to 27th nationally.

State officials must also consider the economic effects of a 10 cent-per-gallon tax increase. Some proponents of the gas tax hike insist that few would even notice a pennies-on-the-dollar increase, but the additional dime-per-gallon will undoubtedly raise costs for shippers and retailers. While many have been led to believe that these businesses will shoulder the higher cost of fuel, consumers should expect this tax to be passed along to them, as the price of every product or service delivered by a motor vehicle will reflect the higher tax rate. The Energy Information Administration affirms that the “pass-through” cost happens fast, in as few as two months. Finally, the worst outcome would be the loss of an estimated 500 private sector jobs per year, according to the Wyoming Liberty Group.

Legislators managed to raise the gas tax by a nickel in 1998. If the 2013 proposal passes, an even higher rate would likely be sought in the near future unless elected officials practice some fiscal discipline. As Wyomingites, and all Americans, face soaring health care costs and lousy “Fiscal Cliff” deal tax hikes in 2013, now is an especially bad time for state leaders to grease the gears of the government spending machine. Lawmakers should address highway repairs by trimming wasteful expenditures and properly allocating existing transportation dollars, instead of following in Washington, D.C.‘s tax-and-spend footsteps.

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